A London law firm have lost an appeal against a former client, who they claim broke a retainer which stated they owed the firm a duty of good faith. The case has raised questions as to when – and if – clients owe their solicitors a duty of good faith, with the presiding judge describing the concept as “startling”.
Saudi businessman Sheikh Mohamed Bin Issa Al-Jaber hired Candey to sued Bosheh and his son for fraud. However, shortly before the trial took place an agreement was reached between them which meant the case did not have to go to court.
Candey claimed the two conspired to come to an agreement before the trial. This meant they avoided paying the firm for their work, with fees estimated to be around £1.2m.
The firm argued this was a breach of the retainer, which it was agreed the Boshehs “would at all times act in good faith”. However, the High Court ruled “a retainer between a solicitor and client is not subject to a duty of good faith”.
The case was taken to a Court of Appeal which found there was “no cogent basis for the implication of such a term”.
Lord Justice Coulson, who presided over the case, stated:
“There is no authority that supports the proposition that, when retaining a solicitor to act for him or for her, the client owed that solicitor a duty of good faith.
The absence of authority is perhaps unsurprising: it is a startling concept. Many would say that, if a duty of good faith was applicable at all, it would arise the other way round and be owed by the solicitor to the client.”
He also stated “beyond the question of remuneration … there is no relevant distinction between a CFA (conditional fee agreement) and an ordinary retainer” and that it was “assumed that it was quite possible that Sheikh Mohamed would win his claim – that he would prove that the Boshehs had acted fraudulently – because the CFA provided that, if that happened, Candey would recover nothing”.
The claim that confidential material was sent after the retainer was terminated, and privileged material was provided whilst preparing the Boshehs’ defence by Sheikh Mohamed, was also rejected.
Candey said afterwards they would be taking the case to the Supreme Court. They stated:
“It is disappointing that practising lawyers can have no course of redress, even when they are the victims of fraud, because they cannot rely on crucial evidence to make out their case. No lawyer should have to consent to being deceived. No client should be able to obtain services by deception.
The court considered risk as a matter of contract without recognising the longstanding principles in the tort of deceit. This is even more startling for contingent fee arrangements, where lawyers may be dissuaded from taking risk if their rights of redress are severely limited.
We hope that the Supreme Court recognises that the decision is respectfully wrong and such erosion of lawyers’ rights will have an impact on their willingness to act for impoverished meritorious clients, contrary to the public interest.”
